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Ethereum Sees Wild Day as Price Soars to Near Record Levels

Ethereum prices waver late Wednesday after rising sharply earlier in the day.

Ether, the native currency on the ethereum blockchain, had a wild Wednesday as the cryptocurrency soared to near record levels.

Prices came down by Wednesday afternoon and ethereum was down 1.40% to $4,598 at last check, according to Coindesk.

Bitcoin was off nearly 1% to $56,888.

Cryptocurrency prices tumbled on Friday due to concerns about the omicron Covid-19 variant.

"There is nothing in particular that is driving this rally, other than a retest of the previous highs from early November which would be a technical reason," said Jake Wujastyk, Chief Market Analyst at TrendSpider

"One thought is that crypto is gaining steam after Jerome Powell mentioned that inflation is not transitory at this point and people may be buying crypto as a hedge against inflation."

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He noted that based on the current long-term trend for ethereum, "the price recently bounced off the current trend zone originating from the Covid lows as well as the April 2021 highs which created confluence of both diagonal and horizontal support/resistance levels."

"At this point, the price is holding above both of these levels nicely," Wujastyk said. "Going into December, ethereum has a very high win rate for the month of December. The win rate for December since 2016 is 80% which means that over the last five years, December has closed higher than November's close 80% of the time."

As long as higher lows and higher highs remain, the primary trend should continue higher, he said.

Micah Carnahan, crypto expert and writer with Finder, said that with the state of Decentralized Finance (DeFi) growing mainly on the ethereum network, participants are piling in to take advantage of the current rise. 

"But today’s jump in prices is more likely related to plans that will merge the ethereum mainnet with the Beacon Chain, a long expected development on the road to ethereum 2.0," he said. "Ethereum 2.0, or Eth2, deals with a series of upgrades transitioning the blockchain to a Proof-of-stake (PoS) mechanism."

Focusing on scalability and security, Eth2 looks to vastly expand the number of transactions per second the network can handle, Carnahan said, "and hopefully mitigate the soaring gas fees required for transactions on the network."

The Beacon Chain, shipped on December 1 2020, seeks to coordinate the network's shards and stakers and introduce PoS to the network.

"Ethereum developers recently announced a self-guided program to help test the new merge," Carnahan said. "After merging the ethereum main net with the Beacon Chain, the next upgrade will introduce shard chains, effectively spreading the network load and improving ethereum’s scalability and capacity."